How Banking Can Wear the Smart Watch Well

Quick access to financial information right when you need it. That core premise of mobile banking could get a big boost from the emerging wearable tech market in the next few years as more consumers embrace the convenience of at-a-glance notifications and actions.

The overall wearables category is still in its infancy. IDC recently projected a compound annual growth rate of 45.1% over the next five years, to 126.1 million units. Leading the way currently are devices like the new Apple Watch, Motorola’s Moto 360, Samsung’s Gear line and the Pebble Watch.

That’s still a tiny market compared to the ubiquity of smartphones. IDC says that in just the first quarter of this year alone, smartphone vendors shipped 334 million phones.

However, in the same way that the introduction of smartphones paved the way for game changers like Remote Deposit Capture, the new wearable world has the potential to change the way we think about banking on the go. Forward-thinking financial institutions are diving into development for the new platform to discover innovative possibilities for mobile banking in the age of even tinier screens. How should they approach these new engagement experiences?

MAKING BANKING EVEN MORE PERSONAL

As Apple says, these devices are perhaps the most personal devices ever made. That means when the bank is tapping you on the shoulder with a message it had better be really important or contextual to what you are already doing. The entire notion of customer contact has to be clearly defined. We cannot clutter the screen with information that isn’t personal and directly relevant to the specific individual. Here are some quick thoughts on the potential as financial institutions size up the smartwatch:

A SMARTWATCH MINDSET: A wristwatch that’s always present on you represents an entirely different kind of interaction that needs to be taken into account. Financial institutions learned similar lessons during the shift from desktop to mobile banking. Not all of the complexity present on the desktop was needed or wanted in the smaller real estate and shorter interactions necessitated by the smartphone. Additionally, entirely new capabilities like geolocation and photo-taking introduced banking features that would not have been considered in the desktop mindset. Financial Institutions considering use cases for the smartwatch should think about what can now be possible with capabilities like bio-sensors, geolocation and gestures. The biggest takeaway? The smartwatch experience should not just be a shrunken smartphone experience.

BANKING AT A GLANCE: A smart watch experience needs to be a glance away; users will not appreciate wearing out their deltoids as they muddle through complex feature interactions. This makes the need for relevant delivery of quick-hit features via ‘push’ notifications essential. Why log in to view a balance when it can be delivered when you need it? Why search through what bills to pay when you can be reminded? Already, according to Javelin, 40% of banking customers are receiving any kind of financial alert from their institutions. The wearable experience challenges us to consider what other essential financial messages should be made available outside of the traditional login experience.

DEEPER DATA UNDERSTANDING: Ultimately, the wearable experience is a challenge to financial institutions to improve the application of data analytics to their user’s benefit — the watch is only as useful as what gets sent to it, after all. Creating a quick-hit contextual experience requires deep understanding of what matters to the customer, how they want to be messaged and what they can do with the information presented. In 2014, when Facebook released its Year in Review feature, while some users were delighted by the memories shown in an automatically generated video that simply strung together their photos, others were horrified to see images reminding them of exes or personal tragedies. Getting any aspect of a predicted experience wrong will result at best in annoyance and at worst, a breach of trust.

NEW SECURITY USE CASES: Apple CEO Tim Cook, among others, has publicly mused about the potential for these devices to replace keys to open car doors or gain access to hotel rooms. In the financial industry, wearable technology could become a convenient but secure way to access an individual’s finances. This would be a significant competitive differentiator for organizations that are early adopters.

The bottom line: Smartwatch banking is not just about cool new hardware. It is just as much about the services that we will need to develop to deliver experiences that delight customers and an impact on their entire banking lives.

Have you started thinking about how to deliver a smartwatch banking experience? If so, what made you start considering it? If not, what would convince you to start?

Marshall Yuan is a senior product manager at Digital Insight Labs where he has been leading experimentation in new solutions to help financial institutions engage and delight their end users.

Additionally, Marshall previously served as product manager for Digital Insight’s Android application and personal finance management products. Prior to Digital Insight, Marshall was a product manager and interaction designer at Intuit, Inc. He has a bachelor of electrical engineering degree and a masters degree in management science and engineering from Stanford University.

Comments

Good information and it will be interesting to see if Apple can get the “smart watch” to take off. I think wearables will gain more traction, but it will be interesting to see when and how that happens.

Wearables need real time customizable notifications-that will make this delivery channel rock, but they need more. The challenge is to have a “wearable solution” that provides the real time customizable notifications, utilizes geo tracking, and account aggregation. How cool would it be that my bank alerts me when I am walking into a store which credit card or debit card has sufficient balances to make a purchase and any offers/rewards for the purchase. And my debit card limits could be raised at the POS or approved if traveling-eliminating the need to call after the purchase is declined. Just providing balance updates is not enough-the wearable app needs to wow the user.

The rampant updates in technology really put a strain on the industry to keep pace with the new developments to stay competitive and responsive to demand. Wearables are a prime example of this evolution. Wouldn’t that be great if your wearable had the ability to act as a ‘digital wallet’ to be able to make POS Purchases and pay directly from the wearable while simultaneously letting the consumer see real time available balances and debit or credit card limits instantaneously? Verification could maybe use retina scanning and/or fingerprint technology for verification and approval.

The technology is amazing and changes almost daily. The key thing for those of us in smaller banks is to determine the best use of our resources when we tap into these everychanging channels. We need a crystal ball to determine which channel is going to best assist us in obtaining that true all in one mobile wallet!

Wearables will continue to gain traction and the financial industry needs to jump on board and not get so far behind as we are on smartphones. Wearables allow much of the same functionality as a smartphone would but more convenient to receive messages with, pay with, and get up to date information like balances and navigation. How many times has your phone made a noise or vibrated when in your pocket or purse and you had no idea you had a missed call or text. If wearables can provide similar alerting methods, but on your wrist, it will be much harder to miss. You throw in payments and you won’t need to dig for your phone or cards…just hold your wrist near the terminal and you are set! A lot of great stuff will happen with wearables, the question is: Can we keep up?

Remember the Apple Newton? Probably not. What the Newton did was give Apple a great understanding in what people would need in a personal assistant. They were way ahead of their time with the Newton.

We need smart watch apps, even if they are not perfect yet. We need to show that we are ahead of the curve and that we are ever evolving with our technology. When we look at local credit unions and banks we see that most offer the same financial products and services. Even the customer/member service is the same. Technology and variety of that technology does give us a competitive advantage. If we are already having people ask for it, then we are already behind. We should be anticipating our members/customers needs.

I think smart watch apps should be a priority. I know adoption of the Android watch is low, but I do think we need to meet both our Apple and Android users. Have you ever had to explain to a member/customer that if they want a product they need to change to a different brand? or that we don’t care as much about Android users because the market says their low. Our members don’t care about the market, they care about us caring about them as an individual. I would encourage Digital Insight to rethink the Android watch app.

Another idea I heard recently for smart watches is using them for authentication. If a watch app can replace a step for members logging into their online or mobile apps, that to me would be a big win. I’m not sure what exactly the phone would do to streamline this but I’m sure there’s something there that would.

There were mixed reviews when smartwatches first came out, but the smartwatch will continue to evolve. With that evolution and development, they will become a natural extension of the smartphone. Mobile banking is a must have and it’s great to be able to get ahead of the game and gain member/customer feedback as development continues.

We have had more request for Apple pay on the smart watch rather than mobile banking on the smart watch. I have had an Apple watch for a few weeks now and do not see customers doing much more than reading push notifications for banking alerts. Not very user friendly when trying to interact with the watch.

The possibilities are endless when you couple a wearable, like Apple Watch, with touchless NFC to deliver enhanced end-user experiences. This concept is running live in a large outdoor “lab” at Disneyland. No battery life issues and experiences are customized to individual levels based on known preferences. The wearing of active devices (Apple Watch) adds to the universe of possibilities with built in sensors that measure things like heart rate, heart beach, body temp, and such that will be leveraged by apps to enable MFA for increased security around accessing sensitive FI and Health data as long as you are wearing the device. Its not a question of how but rather when these capabilities will be leveraged by app developers. Be on the look out for the next development by Apple of a new E-Commerce platform offering which delivers real time data about your financial status and credit worthiness to enable POS transaction options based on your current financial condition and only offering you what you can actually afford. Stay tuned for the next release of iOS for a peek into the realm of possibilities.